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Author Topic: Bitcoin vs gold, dollar, euro, SF  (Read 924 times)
ganalon
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August 05, 2011, 05:00:08 AM
 #1

My opinion.  Feel free to rip it up.

Financial markets are in relative turmoil.   Where is the safe haven?  US Treasurys pay jack squat (c'mon less than 4% on 30-year bonds) and face the prospect of downgrade to AA despite the debt ceiling deal.  The Euro nations have their own currency issues with the PIIGS (Portugal, Ireland, Italy, Greece, and Spain).

This leaves the Swiss Franc and gold, both of which have had huge run ups in the past year/years.

So does that position BTC as the next alternative's alternative?  Maybe.  Highly speculative, but maybe.

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ganalon
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August 05, 2011, 06:19:22 AM
 #2

Please flame (or praise) this post.  I'm thinking about investing at least $500 in BTC (via CampBX) plus paying another $300 for hardware to mine more bitcoins with my old PC.  I invite ALL feedback!  Thanks.  Undecided

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August 05, 2011, 09:11:49 AM
 #3

I think for the average investor, bitcoin remains a highly speculative bet. I have coins bought at around $15, but I don't advise my family to go in even now, at $11. I believe in bitcoin, they don't.

Bitcoin is not a safe haven in market uncertainty, not even close. But it is a great attempt at creating digital money, which is restrained. That has not changed. I think people buying into btc right now might very well profit, but they might lose greatly as well.

ganalon
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August 06, 2011, 04:26:40 AM
 #4

No doubt, Bitcoin is *highly* speculative.  If Dwolla wasn't so slow to set up (a linked account to) I'd have bought in at about $13.50.  Instead I'll buy in at what looks to be a lower price... still waiting.  I think BTC could go to $3 just as easily as to $30.

For you financial types I'd say it a risky asset, but also likely to have 0 or even negative correlation to other asset classes. 

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bitcola
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August 06, 2011, 08:10:52 PM
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No doubt, Bitcoin is *highly* speculative.  If Dwolla wasn't so slow to set up (a linked account to) I'd have bought in at about $13.50.  Instead I'll buy in at what looks to be a lower price... still waiting.  I think BTC could go to $3 just as easily as to $30.

For you financial types I'd say it a risky asset, but also likely to have 0 or even negative correlation to other asset classes. 

Yeah, negative correlation is a good thing normally for asset protection. But not when the currency itself has such poor security that you can get hacked, delete your file accidentally etc. The currency is in dire need of further development.

As well as Swiss Franc, you might also want to consider Chilean Peso, Norweigan Krone and Singapore Dollar.

Sovereign Man has a good blog: http://www.sovereignman.com/

From his blog:

Quote
Print. Lie. Borrow. Deceive. Deny.  These are a the principal tenants of the Greek restructuring plan that were released today from Brussels... it's as if EU policymakers put it together after shaking a Magic 8-ball.

The whole world knows that Greece is bankrupt and has been living bailout to bailout for over a year. Deep in debt and devoid of cash, the country has completely forsaken its sovereignty in exchange for becoming a ward of the European Union; Prime Minister George Papandreou is now a hapless stooge awaiting instructions from Germany.

It's ironic that the Greek proposal released today calls for a 'Marshall Plan' of investment across Europe... given that the last time Greece was being controlled by Germany was during the country's occupation by Nazi forces after being vanquished by Hitler's 12th Army in April 1941.

And so, with limited debate and even less fanfare, Europe has just officially signed on to destroy its own currency. Utterly worthless, quasi-defaulted Greek debt will become perfectly acceptable collateral, much in the same way that the US Federal Reserve took every scrap of toxic paper it could find off banks in 2008 and 2009.

Given the favorable market reaction, European politicians must be feeling pretty proud of themselves. The euro is up. The stock market is up. Oil is up. Well, never mind about oil, they'll blame that on evil speculators... just like food prices.

And the proposal is so deliberately vague, they can go back home and tell constituents whatever they want. Angela Merkel can tell German voters that the French are paying for it, and Sarkozy and tell French voters that the Germans are paying for it. Win, win!

The European sovereign default SOP has just been set. When Spain, Italy, Portugal, and Ireland's time of insolvency arrives, it will be handled just like this: Print. Lie. Borrow. Deceive. Deny.

Every day it becomes more and more obvious that the financial system as we know it is breaking down. The United States and European monetary union, whose currencies comprise nearly the entirety of the world's fiat reserves, have both signed up to debase their currencies as rapidly as possible.

This is going to kick inflation up another notch as anyone holding on to Greek debt is going to trade out of it as quickly as possible. All that money has to go somewhere... and it's a sure bet that a lot of it will feed rising commodities price (which translates into more inflation).

If you haven't found a safe haven for your savings yet, it's time to start. Now. No more excuses.  A few you could consider:

Swiss franc, Norwegian krone, Singapore dollar, Chilean peso: These four currencies are generally regarded as safer, stronger, and managed by less obtuse central banks.  In a world of fiat, these are among the least worst of the bunch.

Unidad de Fomento (UF): This is a special unit of account used in Chile that was set up during the hyperinflation days of the 1960s.  The UF is designed to keep pace with inflation and it's possible to establish a bank account denominated in UF in Chile. I'll be telling SMC members how to do that in an upcoming issue.

Agricultural Property: Nothing hedges your risk against rising food prices like being able to produce your own food. This idea underpins the concept for the resilient community we're planning in South America.

Precious Metals: Portable, divisible, durable, and scarce, precious metals are the classic hedge against rising prices. Gold and silver aren't going to go up in a straight line, and gold in particular is due for a correction, but in a world ruled by an economic magic 8-ball, it's a much safer store of value than a government IOU.

High quality equities: If my only two options are Apple stock and a bank account earning 0% interest, I'm going with Steve Jobs. The chief problem with equities is that the more money that central banks print, the more money flows into equities... pushing valuations up to dizzying (and unsustainable) levels.

Firearms and ammunition: Weapons and ammo serve a dual purpose of providing better home security, as well as a reasonable store of value. Unfortunately, they can also serve a third purpose-- putting you on some government agency's radar.

This list is by no means exhaustive... but if you have the majority of your savings just sitting there wasting away, it's time to act.



Until tomorrow,

Simon Black
Senior Editor, SovereignMan.com
enmaku
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August 06, 2011, 08:16:23 PM
 #6

But not when the currency itself has such poor security that you can get hacked, delete your file accidentally etc. The currency is in dire need of further development.

Really tired of saying this people. Bitcoin itself has not been hacked. Bitcoin itself is still secure. If you obtained your coins, put them in a wallet.dat file and have some reasonable security/backups around that file, your coins are safe. What HAS been hacked is the infrastructure surrounding bitcoin. These statements are ridiculous and I'm tired of them - it's like saying the power company is at fault if you get a poorly manufactured light bulb.

Services that USE bitcoin have been hacked, which is their own fault for having such lax standards. Bitcoin itself is fine.

Edit: As for "deleting your file accidentally" that's like saying the dollar is insecure because you could inadvertently set it on fire. If you're stupid enough to take a lighter to a $100 bill, don't complain when it burns.

bitcola
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August 06, 2011, 08:31:20 PM
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But not when the currency itself has such poor security that you can get hacked, delete your file accidentally etc. The currency is in dire need of further development.

Really tired of saying this people. Bitcoin itself has not been hacked. Bitcoin itself is still secure. If you obtained your coins, put them in a wallet.dat file and have some reasonable security/backups around that file, your coins are safe. What HAS been hacked is the infrastructure surrounding bitcoin. These statements are ridiculous and I'm tired of them - it's like saying the power company is at fault if you get a poorly manufactured light bulb.

Services that USE bitcoin have been hacked, which is their own fault for having such lax standards. Bitcoin itself is fine.

Edit: As for "deleting your file accidentally" that's like saying the dollar is insecure because you could inadvertently set it on fire. If you're stupid enough to take a lighter to a $100 bill, don't complain when it burns.

When did I say bitcoin was hacked?

And burning money requires taking a lighter and intending to set fire to it. Percentage-wise, more bitcoins get destroyed through carelessness than dollars do. It's too easy to delete accidentally or reformat without backing up properly.
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